Interview: Storent’s growth path in the Baltics
03 November 2023
IRN’s Lewis Tyler speaks to Andris Pavlovs, co-founder and chairman of the board of Storent Group, about the company’s recent funding round, its growth strategy, and the Baltic rental market.
Latvian rental company Storent Holdings recently finalised a bond offering of €4.5 million, with the final amount being oversubscribed and totalling €7.2 million from 1325 unique investors.
IRN: You recently held two bond offerings, what do you plan to use the bonds for?
Andris Pavlovs: As our ownership structure changed in December 2022, Storent had taken course to major growth in near future. We used the bonds to refinance the previous bonds and debts to previous owners of our company.
With those obstacles out of the way we can invest in our growth by expanding our fleet and number of rental depots. This will help us do everything we planned and to increase the efficiency of our company.
IRN: Will you hold further bonds in the future?
We are extremely happy to have such a demand for our bonds that we not only reached our target but had oversubscription. The best surprise was the activity of retail investors. At the moment the amount we raised is enough to grow at the pace we want to, but we don’t exclude the possibility to issue more if we see a great opportunity ahead.
IRN: What is the company’s strategy for growth?
We aim to gain a bigger share of business in the Baltic region with special focus on increasing our share in Estonia. In the Nordic countries we see ourselves stronger as a niche player in specific product groups.
In addition to this, we aim to increase our efficiency in every part of the company’s work by fully implementing digitalisation in the company. By the end of 2023 we plan to finish implementation of a new ERP system called IRMS (Inteligent Rental Management Systems) that supports rental and all related operation, with the biggest focus on process automatisation and the best possible user experience.
The new ERP system is integrated with many other IT technology products like outer credit rating system, GPS tracking, transport management system, CRM, customer online portal and synchronised with financial accounting system.
The cloud-based IRMS product ensures flexible business analytic tools that allows tracking of rental operation KPIs and other important business measurements for a purpose to make business decision for tomorrow based on today’s data without any delay.
We also plan to strengthen our cooperation with PreferRent. Work on this platform increases our work efficiency greatly, so it is an important tool in our strategy.
IRN: Are you planning any expansion into new countries or services in the future?
There are no such plans in our strategy at the moment, but we are always open to new opportunities if they appear and match our ambitions.
IRN: What is your strategy for technology?
Our strategy for technology is divided in two ways. Firstly, digitalisation of internal processes and cooperation with customers and implementation of new products for customers. Another is fleet.
Regarding digitalisation, we are implementing IRMS in our company to fully digitalise every process and work as efficiently as we can within the company. It is a part of the PreferRent eco-system and gives great benefits not only for work organisation, but also with work with customers.
We aim to automate wherever possible and let the technologies work for our employees. Digitalisation is our past, present and future, not only clients see that through our online rental platform, but employees live with it because their cooperation is built online since the day Storent started.
We created a unique platform so that every process can be automated till maximum and work can be done efficiently. For inner organisation this digitalisation process gives us automated customer checks, reservations, organised delivery logistics (through CargoPoint), automated technician workflow, automated accounting and management reposts, profit and loss for each equipment unit and much more.
From the clients perspective, we ensure a work cabinet that gives full access to history of collaboration (rented equipment, invoices etc.), inventory of equipment on site, equipment available (and its location), individual rental cost calculations for each customer and much more. We plan to work further to lift this game changing innovation to an even higher level.
Our other technology strategy is the future of our fleet. Storent follows the latest trends in the production of construction equipment as well as to the growing demand of new requirements towards environmental sustainability.
We aim to deliver our customers both a well maintained equipment and the newest equipment available in the market. In cooperation with well-known manufacturers in the world, we acquire new equipment and thus inevitably supplement the fleet with equipment which is manufactured according to the latest requirements in environmental protection.
IRN: What changes are you noting within rental in the Baltic region?
The Baltic rental industry has always had a strong competition with many rental companies, and it still remains so. Because of that there is high pressure with rental price, speed and quality, as everyone wants to get their market share and possibilities to make money.
Overall, the Baltic region is not fully using all the possibilities technologies has to offer, but, because of the lack of working power, industry is forced to look for solutions.
Machinery with a wider range of possibilities is chosen to substitute workers’ deficits. Technologies that have been in Scandinavian countries for quite some time are coming in Baltics and people value them greatly.
IRN: How is demand holding up in the region?
There are some changes in industries. Some areas are slowing down, others are growing fast. The residential sector is slowing down, but at the same time big projects like Rail Baltic are positively affecting the rental market as they are in the building stage now and lots of equipment is needed.
Lots of projects of reusable energy sources are made and at the moment lots of solar panel parks are being built and wind farms are planned in the near future. Events are thriving again after the end of Covid restrictions, while the military field is active and demands lots of resources.
Also, we see a change in user behaviour. Demand for online rental that provides speed and efficiency is increasing as we see our competition starting to implement online tools that we are already using.
PreferRent, a platform that gives an opportunity to everyone to get in the equipment rental industry with a few simple steps, will play a big role in the transformation. Even a customer, if he has some equipment to rent, can become provider.
This new digital tool is already changing the customer/provider relationship in the Baltic region and I believe it will spread further because of the great benefits it gives to users.
The offerings provided by PreferRent for rental companies of all sizes will help smaller rental companies to implement modern, digital and effective way of handling rental process, including online sales. I strongly believe that the rental industry should start using technologies as it’s the key element for profitable and successful business.